sustainability - SUNY College of Environmental Science and Forestry

Sustainability 2011 , 3
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calculate (1) without discounting future energy production versus energy produced and consumed
today, and for simplicity, our analysis also assumes simple energy and cash flow accounting (i.e., we
do not discount energy or money) [24].

(1)

Most analyses also imply that the relation for investments today are reflecting production today,
whereas today’s production is partly from yesterday’s capital investments and today’s capital
investments are partly for tomorrow’s production. The data from [18] used in this paper indicate that
the ratio of indirect Ein/direct Ein for US oil and gas has varied from less than 0.3 to over 2 in the years
in which high oil prices induced large increases in exploration and drilling (see Figure 2).

Figure 2. The capital intensity (ratio of indirect Ein over direct Ein) of the US oil and gas

industry has increased over time with large ratios represented by times of high drilling

activity in 1982 and 2007 (data from [18] assuming that a nominal 14 MJ was consumed

for each real 2005 dollar invested for indirect Ein).

We now deconstruct (1) into a form used to calculate results for this paper. However, for previous
descriptions of the general framework for characterizing how to include different inputs and outputs
in (1), see [25-29]. Note that both the numerator and denominator of (1) can be composed of multiple
factors: M forms of energy outputs and N forms of energy inputs. For example, an analysis of a
drilling operation producing oil, natural gas, and natural gas liquids must count the energy content of
all three (e.g., M = 3) resources to calculate Eout. The same premise holds for calculating Ein. Relations
for the energy outputs and inputs of an energy production system are shown in (2) and (3) as a function

in

out

E

EROIE

0

0.5

1

1.5

2

2.5

3

1900 1920 1940 1960 1980 2000 2020

indirect

E

/directin

E

:in

US

oil

and

gas

G